The UK government is inviting peer-to-peer lenders to apply for a slice of a £100 million pot that has been earmarked for firms that can offer alternative lending sources for small businesses.
With small and medium sized firms still complaining that banks are unwilling to lend to them, the government hopes the £100 million injection into the P2P market will help it emerge as a serious alternative.
According to the BBC, Funding Circle - which has lent just under £34 million since launching in August 2010 - is applying for £30 million, which will be put into a government account, joining money from thousands of normal lenders. MarketInvoice, which lets firms sell invoices, is also expected to apply for £30 million.
Business Secretary Vince Cable says: "As businesses are continuing to struggle to get credit from their banks, developing alternative lending channels is essential so firms are less reliant on banks. Our aim is to create a more diverse financial infrastructure which better serves the needs of our small and medium-sized companies."